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Author/Editor:
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Ruud A. de Mooij ; Michael Keen ; Masanori Orihara
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Publication Date:
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February 25, 2013
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Electronic Access:
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Free Full text
(PDF file size is 1,058KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.
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Order a print copy
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Series:
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Working Paper No. 13/48
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Subject(s):
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Tax systems | Corporate taxes | Banks | Financial crisis | Corporate sector | Taxation
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English
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Publication Date:
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February 25, 2013
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ISBN/ISSN:
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9781475577709/1018-5941
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Format:
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Paper
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Stock No:
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WPIEA2013048
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Pages:
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26
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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